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January 21, 2002
Analysts: Old Fixes Won't Help Health Care
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This time, the analysts said, it isn't just rising costs and a shrinking economy that are stressing the system. America's retired population is expected to double by 2030, and adding that element to the current crisis is bound to force a testing of uncharted waters.
The Reuters news agency quoted the analysts as they spoke at the National Health Care Policy Conference.
Instead of using managed care and HMOs to control costs, the experts said, the system may now have to turn to corporate healthcare purchasers and drastically different budget priorities.
Health-care costs have been rising at annual clips of 6 or 7 percent for five years, but a booming economy and bulging government surpluses made them easier to bear. Now, though, costs are rising against the backdrop of federal deficits and a zero-growth economy for private health insurers, consumers and the government.
"It's like 1991 revisited," said Dr. Gail R. Wilensky, an economist and former Health Care Financing Administration official.
Back then, Reuters notes, HMOs and other managed care companies stepped in and drastically cut private health costs by cutting some health benefits, paring down doctors' pay and making special deals with prescription drug makers. By 1994, private healthcare spending was growing more slowly than the economy.
The tradeoff was a furious public.
"When they found their healthcare delivery system was changing in ways they didn't like...they became very angry," Wilensky said.
The managed-care battles have left most policymakers unwilling to turn again to HMOs. Meanwhile, analysts expect 35 million retiring baby boomers to more than double national healthcare spending from its current level to 15 percent of the economy by 2030.
"These are not such complicated economic questions" as far as lawmakers are concerned, said Dan Crippen, who directs the Congressional Budget Office.
Congress, according to Crippen, can get the public Medicare and Medicaid systems out of crisis with a combination of raising taxes, cutting benefits and borrowing more money against a federal deficit. "Those are the choices, and they're pretty stark," he said.
Meanwhile, large corporations are trying to use their clout to encourage cheaper, efficient services that could lower spending for the whole healthcare system. Many Fortune 500-sized companies that purchase coverage for workers and retirees have begun favoring insurers who emphasize preventive care, disease management and cutting wasteful spending.
The cost of prescription drugs is "a killer," according to Bruce E. Bradley, director of health plan strategy and public policy at General Motors Corp.
GM spends a quarter of its $4.2 billion annual healthcare budget on prescription drugs for its 1.2 million covered employees and retirees. Meanwhile, prescription drug costs nationally rise at more than 10 percent per year.
General Motors is using a variety of incentives to encourage health plans covering its workers to cut costs. But the plans still range from "absolutely wonderful" to "awful," he said.
Bradley acknowledged that smaller companies lacking the market power of General Motors will have less influence on health plans and care providers. Many medium and small employers may be forced to battle rising costs by cutting benefits or increasing the amount employees must pay for care out-of-pocket.
To view the Reuters story, via Lycos, click here.
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